Overview Of The Mauritian Economy Accounting Essay


To explore the state of CSR reporting in annual reports of the Mauritian listed companies and to find out whether it has a relationship with CG attributes board size, board composition, audit committee composition, CEO duality, ownership structure, managerial ownership, industry and firm size.

Methodology: Content analysis is used to extract CSR reporting and CG information from the latest annual reports of the 47 sample firms (randomly selected from the population of 93). CSR related information is measured both in terms of words disclosed and score. A disclosure checklist is prepared building on prior researches and a CSR score is assigned to each firm based on their CSR information that match the checklist. Spearman correlation and simple regression are used to test the hypotheses and examine the level of CSR reporting in annual reports.

Findings: Board size, board composition, managerial ownership and firm size proved to be related to CSR reporting. Board size and firm size are the most significant factors positively influencing CSR reporting. CSR reporting is quite low in the Mauritian listed companies-covering only 38% of the disclosure checklist. Also, Mauritian listed companies make few disclosures on energy theme.

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Conclusion: This paper serves as a useful tool in suggesting ways in which the level of CSR reporting of the Mauritian listed companies can be improved.

Originality: This paper is unique in its type in examining the relationship between CSR reporting and CG attributes in Mauritian listed companies.

Keywords: CSR reporting, CG, Mauritian listed companies.



With the rising suspicion about the social and environmental implications of businesses, remuneration and employment scandals, sustainability and climate change issues climbing high on corporate agendas, damage of consumer confidence and trust in businesses with the financial crisis, coupled with the increase in international interest in non-financial information from various stakeholders; the concept of CSR is growing in importance than ever before. Companies have understood that CSR involvement is no more a charitable action but, it opens the door for future opportunities and competitive advantage.

CSR has now become the way forward for business success- by providing corporate strategy and direction for day-to-day operation. Phases used in the report of the World Business Council for Sustainable Development on Corporate Social Responsibility such as 'business benefit', 'control risks', 'improving reputation', 'identify market opportunities' and 'maintaining public support' give a clear view of the important place that CSR plays in companies

The concept of CSR is not a new one; it dates back to the 1980s. The proliferation of CSR concept has given way for a change in the traditional businessmen perspectives of profit maximisation as was pointed out by Friedman (1970), that the sole social responsibility of companies is to maximise profit. Companies are now aware of the wider aim of social responsibility which is to continuously improve the quality of life while at the same time safeguarding the profitability of the corporation for its stakeholders. Companies now use a plethora of reports for CSR reporting- CSR report, CG report, Sustainability report being the main ones.

Mauritius being no exception, CSR plays an important place. It has a statutory status for CSR which is embodied in the Income Tax Act 1995 which requires all profitable onshore Mauritian companies to allocate 2% of their chargeable income to the CSR fund for government based activities to fight against poverty (Finance Act, 2009 modified in January 2012). Also, CSR disclosures in Mauritius are guided by the CCGM which is mandatory for all PIEs (which includes listed companies). Thus, under section 7 of the code they have to report on the following issues: environment, ethics, Health& safety and social. These are the only guidelines on CSR reporting in Mauritius. Nothing is said as to what need to be disclosed under each section.

longitudinal study of CSR disclosure in Mauritius outlined an improvement in the level and content of CSD after the introduction of the CCGM. This indicates that CSR reporting in Mauritius is highly linked to CG. Based on this, this paper purports to find the relationship between CSR reporting of the Mauritian listed companies and each of the attribute of CG - board size, board composition and audit committee composition to name few. Furthermore, in the absence of clear guidelines on CSR reporting in Mauritius, an examination of the state of CSR reporting of the listed companies is made in order to find means in which CSR reporting of Mauritian listed companies can be improved.

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The remainder of the paper is arranged as follows:

Chapter 2- gives the reader an overview on CSR and CG in Mauritius

Chapter 3- reviews prior relevant literature on CG and CSR in order to develop the research hypotheses

Chapter 4- explains the sample selection and collection of secondary data

Chapter 5-the findings of the research is outlined

Chapter 6-concludes the research with recommendation and scope for the future.

While prior researches on CSR reporting in Mauritius have attempted to explore the content and motive for CSR reporting, this study addresses a new and unique field that is, the relationship between CSR reporting and CG attributes. Thus, the paper is able to identify new means of improving CSR reporting of Mauritian listed companies.

Overview of CSR and CG in Mauritius

This chapter gives an insight on the Mauritian economy before moving to the state of CG and CSR practices of the island.

Overview of the Mauritian economy

Mauritius, an Indian Ocean Island country with a diversified population, presents itself as an economic success story. On a GDP per capita basis, it is ranked fifth in Africa and the WB and IMF report on "Doing business 2010", ranked Mauritius seventeenth worldwide and the best country in Africa for doing business (WB/IMF, 2010). Many factors contribute to its success out of which the good governance system and the social conscious companies of the country are major ones.

Overview of CSR in Mauritius

Incentives to engage in CSR activities in Mauritian companies have a long way back up to some 20 years (). According to Deloitte et al. (2008), engagement in CSR in corporate Mauritius has started at different point in time for the surveyed companies.

Local firms from various sectors engage in CSR projects. The MCB, Barclays bank, HSBC, Ciel Ltd, Airports of Mauritius and Beachcomber group are the names of few companies which make an important contribution in CSR programmes in the island for ages to date (

An examination of annual reports of the Mauritian listed companies from 2004(that is, just after the adoption of the CCGM) to 2007 revealed that the level of corporate social disclosures have increased over the years This implies that corporate governance is linked to CSR in Mauritius as in other countries.

Overview of the Mauritian Corporate Governance system

With the rise in local concerns on corporate accountability and transparency following cases of corporate fraud of high profile companies such as MCB, Rogers group and Air Mauritius, coupled with the need to stabilize the Mauritian financial architecture in order to facilitate the adoption of the WB and IMF international standards and codes initiative for emerging economies; a committee of corporate governance was formed in 2001 which, adopted a code of best practice on Corporate Governance for Mauritius in October 2003. In 2005, a NCCG was set up as the responsible body of corporate governance in Mauritius.

The CCGM draws its principles from the OECD principles of good governance and the king's report with stakeholder interests as the driving force. The code is voluntary but for banks and investment dealers/advisors compliance is mandatory under the Banking Act 2004 and Securities Act 2005; and in 2009 the FRA 2004 was amended now requiring all PIEs to adopt the code on a comply or explain basis. Thus, it is now mandatory for the PIEs.

Furthermore, in 2012 the Economic& Financial measures (Miscellaneous provisions) Act amended the FRA 2004. Under the amendments, every PIE shall now have a statement of compliance with the code of corporate governance in their annual report and where there is no compliance; the statement shall specify the reason for non-compliance. Also, the external auditor has a duty to provide assurance on the statement of compliance of the PIEs with the CCGM. All these provisions help to improve transparency which in turn instills confidence in the users of accounts.


This chapter gives the reader an overview on the literature and research on Corporate Social Responsibility (CSR) and Corporate Governance (CG). The literature review is presented in two main sections. The first section traces the roots and presents an overview on the concept and theories of CSR and CG. In the second section a review on the past studies on the relationship between CSR and CG attributes is made and hypotheses are developed for the Mauritian context.

Concepts and theories of CSR

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Historical evolution of CSR

The origin of CSR can be traced back to the twentieth century in the United States of America. Carroll's pyramid of CSR can serve to explain the historical development of CSR. At the base rests the economic category upon which builds the legal, ethical and philanthropic categories (Carroll, 1991, pp. 42). CSR has evolved as a result of the push of industrialisation, followed by various social& environmental legislations and a rise for social justice and equity.

Nowadays, with the increase in public awareness on environmental and sustainability issues; CSR has found a new field of opening. With the proliferation of CSR and elaboration of theories; it is now that CSR plays its core role such that more and more companies are making voluntary corporate social disclosures.

Definition of CSR

Essentially, the idea of CSR is the way business is operated whereby organisations have a duty towards the community at large. The concern for CSR is explained by the fact that a company do not operate in isolation. Rather, it is dependent on major actors of the society- the environment, customers, and suppliers to name few. Thus, if businesses want to ensure their survival in the long-run, they should consider the interest of the wider society above their own interest The first definition of CSR was given by Bowen (1953) as Carroll (1999, pp. 270) termed him as the father of CSR and who argued that businessmen should act in the best interest of the society as a whole. Bowen's general argument is that a business is an instrument of society thus, it must consider social interest.

Afterwards, many definitions of CSR made their way. Davis (1960, pp.70), put forward that CSR is businessmen's choices and acts that go far ahead the firm's own straight interest. In the same line, McComb (2002, pp.5) posited that, CSR is linking business operation with employee relations, ethical values, transparency, conformity with legal requirements and esteem for the society as a whole. Thus, it can be said that CSR is the commitment of businessmen towards the society through their corporate policies and actions.

In a simpler definition Eilbert and Parket (1973, pp.7) argued that CSR means "the commitment of organisations to play an active role in the solution of broad social problems".

McWilliams and Siegel (2001, pp.117), termed CSR as actions that seem to foster some social good afar the concerns of the firm and that which is imposed by law. From this, it follows that "social responsibility starts where the law ends" (Davis, 1973, pp.313) such that, CSR activities of firms should go beyond the law and exceed their minimum obligations.

A contemporary definition of CSR includes the Triple Bottom Line concept which the EU Greenbook defined in the words to combine social and environmental concerns while undertaking business activities in inter-relation with the various stakeholders (such as shareholders, clients, employees, pressure groups, communities, etc) on a voluntary basis (European Commission, 2001, pp.8). That is, companies should aim at merging economic prosperity with social contribution and environmental integrity as it is the way forward for sustainable survival. The term CSR is also connected with the concept of sustainability which the UN report Our Common Future termed as "meeting the needs of the present without compromising the ability of future generations to meet their own needs" (Brundtland, 1987).

Today, CSR is no panacea but, it is an umbrella that encompasses political, ethical, social, environmental, economical and cultural factors thus, guiding organisations towards success.

CSR reporting is the process of communicating to the public the company's interaction with the environment, the community, its employees, its customers and the scarce resources while undertaking its activities. It provides a balance with the financial data in such a way that it helps shape the overall performance of a company.

Theoretical rationale behind CSR

Over the years, several theories have developed to explain the reasons behind CSR reporting, which the most common are: social contract theory, legitimacy theory, stakeholder theory.

Social contract Theory

Gray, Owen and Adams (1996, pp. 13) described society as a 'social contract' between the members which make a society and the society itself. The social contract theory emerged from the idea that the moment a company is incorporated, a social person is born which owes its existence to society (Younkins, 1948) and a social contact is established which entrails social interaction. This contract necessitates a condition which is best for all people. Under the social contract theory, a company gets a license to operate in the society and those who fail to favour this social contract lose the license and the right to use natural resources, employ workers which threatens their sustainable development (Deegan and Rankin, 1996, pp.54).

Legitimacy Theory

Another theory closely related to the social contract theory which is useful to explain the relevance of CSR is the legitimacy theory.

Suchman (1995, pp.574), defined legitimacy as a generalised view that, "the activities of an organisation are pleasant, good, wanted and in line with the norms, beliefs and expectations of the society". This theory is in fact an extension of the social contract theory. From the contracts that companies have with the society, it flows that they have an obligation to adopt a socially responsible approach to meet society's expectations. Society can hence use CSR engagement to evaluate the legitimacy of an organisation by considering how far they meet the social norms and values (Parsons, 1956) thereby, building a positive image and safeguarding its survival.

Stakeholder Theory

The stakeholder theory posits that the success of a company depends on its ability to meet the demands of its various stakeholders. Taking Freeman (1984, pp.25) classical definition of a stakeholder "any group or individual who can affect or is affected by the achievement of an organisation's objectives". Clearly, a company has various stakeholders which include: shareholders who invest their money in businesses; employees invest their time and intellectual capital; customers invest their trust; government and communities provide infrastructure and market and suppliers provide stock of raw). Thus, it can be seen that stakeholders play an important role of providing supply of needed resources which are crucial to the day-to -day operation of an organisation. As such, an organisation needs to support its' stakeholders by complying with their norms

Corporate Governance and CSR

Another concept which is relevant to the issue is Corporate Governance. Before continuing with the analysis let us first jump to the definition of and reasons behind Corporate Governance.

Corporate Governance practices root back to the eighteen century mainly because of the principle-agent problem in corporations. The basic problem was that corporations were owned by shareholders but managed by management thus giving rise to a separation of ownership and control and the resulting agency problems. That is, management were acting as an agent of the owner and given that they had the control of the business in their hands, they were concerned mainly with their own interest. Thus, they maximised their own benefits rather than that of the owner.

A system of corporate governance emerged as a result of this, under which the activities of management are administered and controlled by the board to reduce agency costs and ensure that they are in line with the interest of the absentee owners (According to the Cadbury report, CG is "the system by which companies are directed and controlled" (Cadbury, 2000). The role of CG is to improve laws and regulations upon which companies operate; protect owners' right; balance the interests of all stakeholders and foremost promote ethics, transparency and fairness in all transactions (Page, 2005, pp.2).

Various scholars perceive the concept of CG as two dimensional- the narrow and broader view of CG. What is important for this study is the broader view of CG which is concerned with an entity's responsibility towards the various stakeholders who directly or indirectly contribute to its success (MacMillan et al., 2004, pp.). This view is in line with the stakeholder theory of CSR. As such, it can be seen that CG and CSR are closely linked if not the same.

CG and CSR are related issue in that both emphasises on a firm's commitment to its stakeholders and contact with the society at large (Jamali et al., 2008, pp.446). Also, according to Jones and Thomas (1995), CSR is a tool of CG which enables companies to meet their obligations towards their employees, suppliers, customers and communities. CSR as a dimension of CG is further illustrated through CG attributes which include board structure, stewardship, capital structure, strategic leadership as well as social responsibility.

Another link which is important is between the legitimacy theory of CSR and CG. Both are ingredients for creating sustainable value which is crucial to the acceptance and survival of an enterprise (Van den Berghe and Louche, 2005). On the one hand, good governance principles bring together the interests of all stakeholders; enhance public confidence which in turn improve firm competitive position and performance. Similarly, CSR brings a company near to its stakeholders thereby gaining public trust, attractiveness and long lasting benefits (Jamali et al., 2008, pp.446).

The links can be illustrated as follows:

Corporate Governance


Connection: both focus on an entity's commitment to its stakeholders.

Broader view of CG: an entity's responsibility towards its various stakeholders (MacMiller et al., 2005)

Stakeholder Theory: companies are made up of a web of stakeholders and have an obligation towards them (Freeman, 1984)

CG principle: reconcile interests of all stakeholders and improve firm competitiveness

Connection: both boost a firm's relationship with its stakeholders to improve performance.

Legitimacy Theory: companies exist because of the society as such they have a responsibility to meet society's expectation with back wash long lasting benefits

Table 1: Link between CSR and CG

Hypotheses Development

The fact that, there exists a connection between CG and CSR, it is obvious that CG attributes such as board size, independent directors, ownership concentration to name few directly influence CSR activities and disclosures as various studies [1] have proved.

Based on empirical studies, 8 hypotheses are developed. Six corporate governance variables are examined to find if they have a correlation with CSR disclosures. Firm size and industry are also included as variables.

Board Size

One of the fundamental of CG is board size which is directly related to the board's effectiveness. Generally, there is no recommended number of board members though; it is argued that a board should not be too small or too big. While it is evidenced by various studies (that small boards alleviate agency problem between management and owners) found that large boards give rise to disagreements resulting in less valuable communication, management and decision making. More board members, however, gives rise to more fresh ideas and more experiences which might in turn lead to better management and communication.

In the Mauritian context, the CCGM does not specify the number of board members but, CSR activities fall under the shoulder of the board.Thus, supporting researches that there exists a positive relationship between board size and CSR disclosures in Malaysian GLCs & public listed companies and in the absence of prior research in the area in Mauritius, it is hypothesized that:

H1. There exists a positive relationship between board size and CSR disclosures in Mauritian listed companies.

Independent Directors

Moving on to another important mechanism of CG, the number of directors on board who are independent from management and dominant shareholders, and who safeguard the interests of shareholders, is likely to influence board success. In an attempt to find the difference between socially responsible firms& non- socially responsible firms found that the difference lies in the board structure that is, the number of independent directors which is larger in socially responsible firms. From this it flows that, the number of independent directors on board is likely to influence a firm's engagement in CSR activities and disclosures in that, the role of independent directors is to monitor the activities of management and promote organisations picture in the eyes of the public. As such, any act of not engaging in CSR activities by management with back wash effect on a firm's reputation is avoided with the presence of independent directors on board

To add to it, further studies revealed that the presence of independent directors on board through their monitoring role, result not only in more revelation of corporate information but also improved quality of disclosures

In Mauritius, the code requires all companies to have at least 2 independent directors on board. This requirement is essential for the monitoring role and the protection of shareholders interests. With no clear evidence on the relationship between CSR disclosures and board structure in Mauritius, the hypothesis is as follows:

H2. There is a positive relationship between the number of independent director on board and the level of CSR disclosure in Mauritian Listed companies.

Audit Committee

Audit committees have the role of reviewing companies' processes; oversee the functioning of the internal control systems and compliance with laws and regulations and providing assurance on the credibility and reliability of financial information. Thus audit committee is directly related to financial reporting (Wright, 1996). Ho and wong (2001) and Bliss and Balachandran (2003) proved in their studies that audit committee is positively related to the level of voluntary disclosures. Forker (1992) moved one step further with his argument that an audit committee with a high percentage of independent directors should mitigate agent conflict of interest and improve internal control system that will contribute towards better quality of disclosures. This argument was supported by Said et al. (2009) research which documented a positive relationship between the proportion of independent directors in an audit committee and the extent of CSR disclosures in Malaysian public listed companies.

In Mauritius, given that the CCGM recommends that the majority of the audit committee be independent directors), it can be assumed that the same positive relationship will exist in Mauritius. Thus, it can be hypothesized that:

H3. The number of independent directors sitting in audit committee is positively related to the level of CSR disclosures in Mauritian listed companies.

CEO Duality

CEO duality occurs when a single person acts both as the CEO and the chairman of the board of a company. A CEO-chairman duality improves the monitoring process as the same person who develops long term vision and strategies for a company, oversees the implementation of these strategies by the management which shape the way forward for realising the long term vision (Haniffa and Cooke, 2002). At the same time, a CEO who is also a board chair, vests too much power in a single person which allows the latter to take decisions in his/her own interests (Jensen and Meckling, 1976). It also affects the effectiveness of the board as the one on whose shoulder rests the responsibility of the board is more concerned with his/her personal interests rather than the best interest of the company. As such issues such as CSR activities and disclosures will not attract the attention of the chairman.

In the CCGM, there is a requirement that the title, role and function of the CEO be kept separately from that of the Chairperson

Thus, CEO duality is a double edged sword which on the one hand, improves a firm monitoring process which might in turn enhance the quality of disclosures and on the other hand, minimises shareholders value. From the above, it can be hypothesized that:

H4. Mauritian listed companies which have CEO duality are more likely to have a low level of CSR disclosures.

Ownership Structure

Ownership structure varies from company to company and from country to country . In some companies, share ownership is concentrated in the hands of few large shareholders while in other companies it is diversified thus, influencing the reporting process (Roberts, 1992).

Clearly, in a company managers who are involved in the day-to-day running of the business have more information than shareholders who are the owners thus, giving rise to agency cost. This explains the rationale behind corporate disclosures which aim to reduce the divergence of information between the principle (managers) and the agent (shareholders). As such, it is quite logical that in a company where there are many shareholders it is more likely that there will be more disclosures of information than that where there are only few shareholders. In a company with dispersed ownership, there is a high level of information asymmetry as more people are involved than that in a concentrated ownership therefore, commanding more disclosures.

Moreover, the divergence of information between shareholders and managers might push shareholders to compel managers to disclose more information thus, spoiling the shareholder and manager relationship (Brammer and Pavelin, 2006). Keim (1978a), went further in his argument that the demands for information grow in size when the ownership of a company is less clustered. In a concentrated ownership company, it is deemed that the level of disclosures will be lower as Revert (2009) put that, managers in concentrated ownership structure suffer from less pressure on the part of share owners and as such are less motivated to report additional corporate information on their websites as the few shareholders can obtain their information directly from the company.

Prior studies carried out on the relationship between ownership structure and CSR disclosures is divided into two camps. While some studies have evidenced the existence of a positive correlation between wider ownership and the level of CSR disclosures, others have indicated a negative relationship.

The CCGM clearly points out that shareholding in Mauritius is concentrated in the hands of few people. For our study, however, given that the target is the Mauritian public listed companies, that is, companies which are listed on the stock exchange of Mauritius thus, it can be assumed that shareholdings in Mauritian public listed companies is dispersed given that anyone who wish can invest in those public listed shares. The hypothesis is as follows:

H5. There is a positive relationship between wider shareholding and the level of CSR disclosures in Mauritian public listed companies.

Managerial ownership

The main reason behind the principal-agent problem is that companies which are owned by shareholders are run by managers who have little or no interest in the company as such, the managers tend to hold their own interest as priority rather than making maximising shareholders wealth. Prior researches (Coffey and Wang, 1998; Mohd Nasir and Abdullah, 2004) have proved that an increase in the amount of equity held by managers in an organisation reduces the principle-agent conflict of interest and enhance managers' motivation to make more reporting. When managerial ownership increases, both managers and shareholders become on the same line of equality and start to share the same values. Just like shareholders wish to invest in socially responsible companies, when managers become shareowners they also share the same view thus, enhancing a firm's engagement in CSR activities and reporting.

studies however, portrayed a negative relationship between managerial ownership and the level of CSR disclosures. Guan found that managerial ownership of above 45% lead to low level of CSR disclosures in the Malaysian public listed companies.

A more recent research however, rejected the negative relationship . It showed that the number of shares held by executives has a positive association with CSR disclosures in the Malaysian listed companies. Thus, in light on this latest research on the connection between management ownership and CSR disclosures; it can be hypothesised that:

H6. There is a positive relationship between the percentages of stocks owned by executive directors and CSR disclosures in Mauritius listed companies.

Firm Size

Various theories have an argument for a size-CSR disclosures relationship. As a matter of fact, large companies engage themselves in a lot of activities and can be expected to make more disclosures than small ones which help to legitimise their actions and ensure their long-term survival (Mohd Ghazali, 2007).

According to the stakeholder theory, social disclosures act as a reply to calls from a firm's external environment. Thus, given that large firms have a pool of stakeholders, they are more exposed to the general public () and hence, face greater pressures under the stakeholder theory to act in a socially responsible manner and to make social disclosures not only to investors but the various stakeholders involved This is evidenced by Guthrie and Parker survey on the differences in social disclosure in the United Kingdom, United State and Australia which concluded that, the majority of disclosures are the direct effect of pressure from the public and larger companies are the more touched (Guthrie and Parker, 1990).

This is further supported by the agency theory. Cowen et al. (1987) argued that larger entities have more shareholders who might pay attention to the social involvement of the company and they might disclose social information through annual reports because of the higher agency cost.

In addition, Watts and Zimmerman (1986) in his political theory put forward that larger companies are more visible in the eyes of the public and in the same way provide more corporate information.

A vast majority of empirical studies carried out around the globe supported a positive relationship between firm size and social disclosure with the exception of few ones. Belkaoui and Karpik (1989) research was different from the others in that it documented a positive relationship between firm size and the content of CSR disclosures.

Base on the bulk of findings on the positive correlation between CSR disclosure and firm size, the few exceptions portraying a negative relationship are nothing. Moreover, a recent KPMG international Corporate Responsibility reporting survey strengthened the common belief that "bigger companies are better at CR reporting" (KPMG, 2011). The survey used revenue as the measurement of firm size and portrayed that as the revenue of companies gain in momentum, the level of CR reporting also followed the pattern such that it concluded that "larger companies are leaders in Corporate Responsibility reporting" (KPMG, 2011, pp.11). From the above, it can be hypothesised that:

H7. Firm size and the level of CSR disclosures of Mauritian listed companies are positively related.


The nature of industry is considered to be another important factor as argued that the involvement in diverse types of voluntary disclosures differ across industries. Basically, some companies because of their activities and the industry to which they belong are bound to make more disclosures in response to pressures from the external environment. Authors such as Dierkes and Preston (1977)and Gray et al. (2001) asserted that companies in environmental sensitive industries like the extracting industry, are more prone to disclose more information than those in other industries. This is explained by the fact that these companies face a lot of social pressures as a result, they have to make disclosures to build public trust.

To add to it, proved that apart from companies of environmental sensitive industries; consumer oriented companies are also expected to be more active in social disclosure that other companies since, the powerful consumers can influence revenue which can in turn play on their long-term survival.

The above literature is supported by the findings of various studies which have evidenced the existence of an industry-disclosure relationship. Furthermore, KPMG(2011, pp.13) reported a higher obligation to CSR reporting among those industries which impact on the society and environment with the highest CSR rating in energy and natural resources industry, followed by ICT, food& beverges, pharmaceutical and construction industries.

Base on the results of prior studies, it can be hypothesised that:

H8. The environmentally sensitive industries in Mauritius disclose more CSR information than other industries.

Research Methodology

Objectives of the study

The basic aim of this research is to:

Test the various hypotheses developed in the literature review chapter in order to find out whether there is a relationship between CSR disclosures and CG attributes in Mauritian listed companies

Gain an insight on the level of CSR disclosures in Mauritian listed companies

Source of data

For the purpose of this study secondary data which are already available on the annual reports of Mauritian listed companies are used. CSR disclosures in annual report are the most common form of disclosing as evidenced by Adam et al. (1998). Based on these findings and the justification of Kent and Chan (2003) on the use of annual report, this study focuses on annual report as the main source of CSR reporting in Mauritian companies. The data obtained are tailor-made to meet the objectives of the study. This method has the advantage of cost and time savings (Boyd, 1994) and avoids all probability of both non-response and response error associated with primary data.

Data collection design

Building on previous social responsibility disclosure studies, a content analysis of the annual reports of the listed companies is carried out. It is "a technique for making inferences by objectively and systematically identifying specified characteristics of messages"). This method is a transparent research form and is useful in dealing with large volumes of data .However, it is criticised on reliability and validity grounds.

Reliability is concerned with the consistency and stability of measures (Bryman and Bell, 2007). This critique does not directly apply to the research as our main concern is on publicly available information from annual reports of companies. Given these are prepared by management, who report on the activities of the company; it can be assumed that the information reported are reliable. For instance, it is not likely that management will report a particular board size in the annual report for a financial year then report another board size for the same financial year as this will entail inconsistency of data and breach of management duty of due care and diligence underlying legal actions. To add to it, the certification and assurance from external auditors on the corporate governance reports of companies (under Section 39 (3) of amended FR Act 2004), from where most of the data are collected; supports the correctness and reliability of the secondary data used in the research.

Further, annual reports of companies for a particular financial period are issued only once. That is, for one financial year a company will not issue two annual reports such that reliability can be tested. Also, cases of correction of the content of annual reports are very dull.

Validity on the other hand, has to do with "whether or not a measure of a concept really measures the concept" (Bryman and Bell, 2007). To cater for this, multiple indicators are used and their relation to the research questions indicates that both validity and reliability are priorities of the study.

Data is collected through the internet, using information from annual reports available on company websites. The latest available reports are considered irrespective of financial year as time period does influence the research. The majority of the annual reports ended on December 2011 and June 2012. Annual reports for December 2012 which were available in March 2013 are not considered because of the time scale of the study. CSR disclosures from all parts of annual reports are considered. For group entities, the CSR reporting of the group are considered. All currencies are converted into Rupees (MUR) using the average exchange rate used by the respective company.

Sampling Unit

Target population: Mauritian Listed companies (both on official Market &DEM)

Sample: 61 of the Mauritian listed companies

The main reason for targeting the listed companies is that though the code of corporate governance is mandatory for banks for years; listed companies are also bound by the amendment of the FRA 2004 made in 2009 to follow the CCGM which outlines under Section 7 that they should report on ethical, environmental, Health& Safety and social issues that is, there CSR activities (Corporate Governance, 2004,pp. 112).

Sampling size

The 93 remaining listed companies are categorized by industry: Transport, storage communication; tourism and leisure; banking, insurance and other finance; investment; trade; construction& building materials; agriculture; manufacturing and pharmaceuticals. From the total of 93 companies, a sample of 47 companies is drawn under the stratified random sampling technique. According to Saunders et al. (2007, pp.221), it is the technique of breaking up a whole population into sub groups known as "strata" and building individual sample from each "stratum".

The target population is divided into different industries from where samples are drawn using simple random sampling. The sampling procedure is depicted below:

Table 2: sampling procedure

Measurement of variables

Each company's annual report is analysed and findings are input on an individual Excel recording sheet.

Dependent variables

The dependent variable, CSR disclosures is measured using two indicators- word count and CSR disclosure per theme.

Word Count

In the first instance, the number of words is used to measure the extent of disclosure. This method is useful as Gray et al., argued that "words lend themselves to more exclusive analysis" (Gray et al., 1995b). It is more in depth unlike other measurements such as part-page disclosure and number of sentences which disregard differences in character and page sizes (Hackston and Milne, 1996; Milne and Adler, 1999). Plausible as it may be, word count is not necessary a reliable measurement as like the other measurements, it ignores the duplication of words to express the same message. To add to it, for very many companies, CSR disclosures consist of narrating stories which increases their CSR words unnecessarily.

CSR disclosure per theme

To overcome this, a CSR scoring system is used as a second measurement of CSR disclosures. Based on the past instruments used by in their studies to measure the level of CSR disclosures per theme; a disclosure checklist with five themes (Appendix 1) encompassing the requirements of the Mauritian Code of Corporate Governance is developed for the research. Themes are categorized as: environment, energy, community involvement, employees and others. The checklist is applied on the annual reports of selected companies to measure the level of CSR disclosures.

Under this method, a point is awarded for each CSR programme disclosed in the annual reports of companies concerning any category contained in the disclosure checklist. If a disclosure is addressed in more than one place in the annual report, a single point is assigned to the disclosure thus, eliminating duplication errors and giving a better image of a company's CSR disclosures.

The maximum CSR score for each theme considered is 10 for both environment and employees, 9 for community involvement, 6 for energy and 2 for others. CSR disclosure score under each theme are cumulated to calculate the total CSR score (Maximum score of 37).

Independent variable

Board size- is measured by the number of members on board.

Independent directors-refer to those directors who have been prominently termed as independent directors in the annual reports of listed companies. They are measured by the ratio of independent directors to total number of directors on board.

Audit committee- the percentage of independent directors to total directors sitting on the audit committee is used.

CEO duality- is measured using a dichotomous variable where "1" means that the CEO is also the chairman of the board and "0" otherwise.

Ownership structure-is measured by percentage of shares held by the ten largest shareholders to the total number of shares issued. Where the ten largest shareholders owned above 50% of the shareholding, it is considered as concentrated. A dichotomous variable is used for recording where variable 1= concentrated ownership and 0= dispersed ownership.

Managerial Ownership- is measured by the percentage of stocks held by executive directors to the total number of stock issued.

Firm size- various studies have measured company size differently. While some (Watson et al., 2002; Tagesson et al., 2009) have used the number of employees, others have preferred the total assets, revenue or even market capitalization. For this research three measures of size are used: Revenue, total assets and market capitalization.

Industry- is classified as follows: Transport, storage communication; tourism and leisure; banking, insurance and other finance; property development; investment; trade; construction& building materials; agriculture; manufacturing and pharmaceuticals.

Statistical Tests

Statistical Package for Social Sciences (SPSS) 17 and Excel are used to analyse the data collected. To test the hypotheses developed, a simple curve estimation regression and correlation tests are used. These tests as used in previous studies (Cooke, 1989b; Gray et at., 1995) measuring social disclosures are appropriate for measuring the relation between qualitative variables (Agresti and Finlay, 1987).

Analysis and Findings

Figure 3: sample

Figure 4: Sample Distribution

CSR disclosure in Mauritius

It is important to note that the standard deviation for CSR word is low which implies that almost all companies in the sample make the relatively the same amount of CSR disclosure in terms of words. The standard deviation for total score however, is comparatively high. This entrails that although all the companies on average disclose around 1088 words on their CSR activities, they differ in the number of CSR programmes that they undertake. That is, some companies 1088 CSR words cover 14 CSR programmes while for others it is well above or below this. This proves that CSR word as a measure of CSR disclosure is not a good medium as it does not measure in real terms. It also helps to explain why CSR score is given a priority over CSR word in the research as a measure of CSR disclosure.

It can be said to some extent that the Mauritian listed companies abide to rules and laws imposed as evidenced by the fact that no company from the sample did experienced CEO duality as clearly put in the CCGM

Figure 6: CSR disclosure by theme

Figure 5 illustrates the CSR programmes encompassing 5 themes which are disclosed in the annual reports of the 47 listed companies. The community theme which covers social activities such as EAP, charitable donations to name few, is ranked first in terms of CSR disclosure with a score of 222, followed by environment and employee themes. This is further supported by Table 5 above, where the mean for community disclosure of 2.86 (5) is highest from the mean of the other themes.

Within the community theme, CSR disclosures related to the welfare of vulnerable children, EAP, charitable donations to NGO's, education of disable children were the most common. The first two categories that is, the welfare of vulnerable children and EAP form part of the 3 priorities of the CSR Fund set by the Government in 2010's budget. This again supports the above say that Mauritian firm abide by regulatory rules and regulations. Further, it shows that with clear guidelines on CSR activities from the Government, companies are in a better position to devise their CSR fund which in turn helps to best satisfy community welfare.

It is surprising to note that, despite the main focus on green energy in line with the project 'Maurice Ile Durable' and the various incentives taken by the Mauritian Government to encourage local companies to produce their own energy and to make efficient use, CSR disclosure under energy theme is still very low among Mauritian listed companies. The Table of frequency in Appendix 4 shows that energy theme is highest in zero score (40%). Out of 47 companies, 19 companies made zero disclosure and out of the remaining 60%, 23 companies make between one to three disclosure(s) and the rest make between four to six disclosures under energy theme. This shows that CSR disclosure under energy theme is still at the introductory phase with a mean of 1.70 (1) as shown in table 1 and with more regulatory guidelines this will grow over time.

An analysis of the state of CSR disclosure of the sample firms revealed that, for the majority CSR disclosure is not objective since only the positive actions are disclosed. Only two companies made a proportional reporting of both the positive and negative actions.

Apart from the lack of objectivity, an analysis of the CSR disclosure in annual reports of firms revealed that just like the Mauritian public sector(OPSG, 2011, pp86); the Mauritian listed companies do not have a specific framework for CSR reporting. Each company discloses what he thinks right and important thus, giving a plausible explanation for the differences in CSR disclosure in Mauritian listed companies.

Most of the companies make their CSR disclosure in their Corporate Governance report with the exception of few which have a separate CSR report. Cases where companies did not make any CSR disclosure in their annual report are nil. This gives an indication that with the amendment of FRA in 2009, making the Mauritian code of Corporate Governance mandatory for Mauritian listed companies; these companies are now active CSR citizens.

An in-depth analysis of the annual reports of the sample firms however, revealed that though all companies make CSR disclosure, a small bunch of companies (2 companies) do not really favor CSR; they disclose a few lines on CSR actions simply for the sake of reporting and to abide with the Mauritian Code of Corporate Governance. This shows that some firms are still ignorant on the need and important of CSR reporting.

Hypothesis Testing

In order to test the hypotheses developed in the literature chapter, SPSS computer based system and excel is used to analyse the data collected. In the first instance, a cross tabulation is carried out in order to display the relationship and measure the association between the dependent and independent variables. Once it is known that there exists an association between the dependent (CSR disclosure) and independent variables, Spearman correlation test is done to measure how variables are related. Finally, a simple regression is conducted to test whether there is a predictive relationship between the variables and to test the hypotheses.

Some of the data collected are normally distributed however, given that the dependent variable that is, CSR word and CSR score are not normally distributed as shown in Table 5.1 in Appendix 5, non parametric test is used to test the hypotheses.

H 1. Board size and CSR disclosure

Tables 6.1 and 6.2 in appendix 6, shows that small board size with 5 to 10 members are centered toward CSR disclosure of around 100 to 2000 words and 1 to 15 in terms of score. Large board sizes of 11 to 15 members on the other hand, are positioned towards larger CSR disclosure both in terms of words and score. Thus, it is clear that large board size disclose more CSR information both in terms of words and score than small board.

Moreover, the Fisher exact test indicates that there is an association between board size and CSR disclosure both in terms of words and score. That is, board size as an independent variable does influence CSR disclosure.

Table 6.3 in appendix 6, gives an indication of the strength of the association between the 2 variables. The relationship between board size and CSR word and CSR score is significant (r= 0.01) - spearman 2 tailed test. The correlation of 0.57 indicates that there is a strong positive relationship between board size and CSR disclosure. That is, as board increases or decreases in size, CSR disclosure follows the same trend. To add to it, the correlation sig value (<0.05) gives an indication that a change in the independent variable , that is, board size stimulates a significant relevant change in CSR disclosure both in terms of words and score.

Though there is a statistical significant between the 2 variables, it is important to note however, that CSR disclosure response rate is slower to that of board size. Simply to put, CSR disclosure increases at a much slower rate than the increase in board size or vice versa. This is depicted in Figure 6.4 in appendix 6, that when board size increase from 5 to 15 members (200%), CSR disclosure is likely to increase from 500 to around 1200 words (≈140%) and from around 8 to 16 (≈100%) in terms of score.

Thus, the correlation and regression approve hypothesis 1 that there exists a significant and positive relationship between board size and CSR disclosure. This contradicts Jessen (1993) say that large board size results in less valuable communication. In fact, large board means more people which is synonymous to more ideas and better communication.

The finding is in line with Esa and Ghazali (2012) and Said et al. (2009) researches in Malaysia that there exists a positive relationship between board size and CSR disclosure.

H2. Independent directors on board and CSR disclosure

The cross tabulation Table 7.1 in appendix 7 indicates that, CSR disclosure in terms of word does not vary according to the number of independent directors on board. This is the case as the number of independent directors on board ranging from 2 to 5 is found to disclose around 100 to 3000 CSR words and the number of independent directors on board above 5 equally disclosed around 100 to 3000 CSR words with the exception of few ones. The exception however, is not the norm. Furthermore, the chi- square cross tabulation portrays that there is no association between independent directors and CSR word.

CSR disclosure measured in terms of CSR score however; prove to have an association with the number of independent directors on board. From Table 7.2 in appendix7, it can be seen boards with higher number of independent directors have higher CSR score with few outliners. Excluding the few exceptions, boards composed of 2 to 5 independent directors have CSR score between 6 to 20 while boards of more than 5 independent directors have CSR score ranging from 20 to 30. Thus, board composition does influence CSR score as evidence by the chi-square CSR score result. Given that CSR score is a more reliable measure of CSR disclosure, it can therefore be assumed base on the chi-square result of CSR score, that the number of independent director on board does influence CSR disclosure.

Base on the association between the number of independent director on board and CSR score, the spearman correlation (r=0.2) in Table 7.3 shows a weak positive relationship between the two variables. This means that as the number of independent directors increases on board, CSR disclosure increases in terms of score or vice versa. One important thing to note however, is that the relationship is only a weak one and as supported by the correlation sig value of 0.6 (Sig >0.05) which indicates that there is no statistical significant correlation between the two variables, a change in board composition causes only a small insignificant change in CSR score.

This is explained by the regression in Figure 7.4 in appendix 7, which depicts that CSR disclosure grows at a diminishing rate as the number of independent director on board increases. Simply to put, as independent directors grow in size, CSR disclosure also increases in terms of score but the rate of increase in the dependent variable is less significant to the rate of increase in the independent variable.

Though there exists a weak and insignificant positive relationship between the number of independent director on board and CSR disclosure, the relationship is still positive thus accepting hypothesis 2. The correlation and regression support weakly the literature that, the number of independent director positively influences a firm engagement in CSR activities and disclosures. Consistent with Said et al. (2009, pp.222) and Esa and Ghazali (2012, pp.229) findings, the research shows that just like in Malaysia, the number of independent director on board in Mauritian companies is positively related to CSR disclosure. Thus, a change in the board composition will cause a small positive change in CSR disclosure. From this, it can be deduced that, the independent directors of Mauritian companies partly play their role of acting in the best interest of the companies by integrating community involvement with their core missions which in turn promote their public image. May be social engagement is not the core concern of the independent directors.

H3. Audit committee and CSR disclosure

93%the listed companies audit committees' are made up of 1 to 5 independent directors. It is wise to mention that if not all but most of the listed companies abide by the Mauritian code of corporate governance which recommends that the majority of audit committee be independent directors. One show not remains silent on the fact that 2 of the listed companies audit committees' did not have the existence of any independent director. This raises questions because audit committee being one of the core committees of an organisation which shoulders the responsibility of reviewing the overall operation of a company; should not be composed of executive directors only.

The cross tabulations in Tables 8.1 and 8.2 in appendix 8 shows that audit committee composition does not influence CSR disclosure. Audit committees composed of 5 independent directors and above make variant CSR disclosure both in terms of words and score. This is further evidenced by the no association chi-square results and the correlations in Table 8.3 in appendix 8 which indicates that there exists a negligible and even no relationship between audit committee composition and CSR word and score.

From the above it flows that, the Mauritian listed companies audit committees' composition do not contribute towards improved internal control and disclosures. Unlike in Malaysia, where said et al. (2009) research documented a positive relationship between the proportion of independent directors in the audit committee and the extent of CSR disclosures in public listed companies; in Mauritius the quality of disclosures of the listed companies do not depend on the audit committee.

Thus, the findings reject hypothesis 3 and do not support say that there exists a link between the composition of audit committee and the level of disclosures.

H4. CEO duality and CSR disclosure

One interesting point is that, all the Mauritian listed companies complied by the CEO duality requirement of the Mauritian code of corporate governance as no cases of a single person acting both as the CEO and the chairman of the board were experienced. Thus, in the absence of CEO duality, hypothesis 4 remains unproven. It cannot be proved that there is an association between the two variables thus accepting or rejecting the hypothesis.

H5. Ownership structure and CSR disclosure

87% of the sample firm has concentrated ownership where the ten largest shareholders own more than 50% of the total shares issued and the remaining companies have dispersed ownership. This discards the assumption made in the literature chapter that listed companies whose shares are listed on the stock exchange is open to the public who wish to invest and thus is expected to have many shareholders.

Moreover, the crosstabulations in appendix 9 provide sufficient evidence to accept the null hypothesis that there is no association between Mauritian listed companies' ownership structure and their CSR disclosure both in terms of words and score. The correlation in Table 9.3 in appendix 9, gives further scope to the null hypothesis. In both cases, the correlation is not significant showing no or even a negligible negative relationship between the variables thus, rejecting hypothesis 5 and the various prior studies [2] which have documented an association between ownership structure and CSR disclosure.

Denying Keim (1978a) and Revert (2009) thinking, the findings point out that the ownership structure of the Mauritian listed companies' do not pressurize their managers for CSR information need thus, influencing the reporting process.

H6. Managerial ownership and CSR disclosure

CSR score being a better measurement of CSR disclosure indicates in Table 10.2 in appendix 10 that, there is an association between managerial ownership and CSR disclosure. Table 10.3 in appendix 10 however; reveal that the association is only a weak one. Managerial ownership is positively related to CSR disclosure where r= 0.2. This means that, as the number shares owned by managers increases in a company; CSR disclosure also increases or vice versa.

Nevertheless, one should not turn down the fact that the relationship is weak and as evidenced by the correlation sig value of 0.17 which is well beyond the benchmark of 5%; there is no statistical significant between the variables. That is, changes in managerial ownership do not stimulate significant changes in CSR disclosure as depicted by the Figure 10.4 in appendix 10.

Though the relationship is a weak one it still supports hypothesis 6 and researches as discussed in the literature chapter, in that a change in managerial ownership will cause a less significant positive change in CSR score. This draws to the conclusion that an increase in managerial ownership in Mauritian listed companies partially drives managers to act in the best interest of companies by enhancing CSR engagement and reporting and at the same time suppressing principle agent conflict of interest.

H7. Firm size and CSR disclosure

Firm size measured by all the 3 variables namely, total assets; market capitalisation and revenue showed an association with CSR word as illustrated by Tables 11.1 to 11.3 in appendix 11. It is a common finding that as total assets, market capitalization and revenue of companies increase; they tend to position themselves towards large band of CSR word. However, no association is found between firm size measured by total asset and market capitalisation and CSR score.

Nevertheless, given the fact that at least 1 of the 3 measurement of firm size which is revenue , showed an association between firm size and CSR score; this is sufficient to support that there is an association between firm size and CSR disclosure both in terms of CSR word and score. Also, Table 11.7 indicates that in both cases the correlation is significant though the relationship between total assets, market capitalisation and CSR score is moderately positive for each one.

This does not matter what is important is that, there is a positive significant relationship with all the variables. As shown by the regression in Figure 11.8, there is a general tendency that as firm grows in size, CSR disclosure also follows the rising trend or vice versa thus supporting hypothesis 7 and Guthrie and Parker (1990), Belkaoui and Karpik (1989), KPMG (2011) researches. It is important to note that though firm size is significantly related to CSR disclosure, there is no association between firm size and ownership structure of the Mauritian listed companies as shown in Table 11.9 in appendix 9. Thus, large firms do not have more shareholders than small ones. This goes against Cowen et al. (1987) argument as discussed above in the literature chapter. The agency theory does not help to explain the higher CSR reporting of large companies over small ones in Mauritius.

H8. Industry and CSR disclosure

The kruskal Wallis test in Table 12.1 in appendix 12 points out that CSR word does not differ across industries. For CSR score however, the test indicates that CSR score is statistically significant across the industries with a mean rank of 38.5 for transport, followed by 36.4 for agriculture and so on.

Let us now look how CSR disclosure differs across the industries. They differ in that tourist and agriculture industries gained the highest CSR score under environment theme, trade scored highest under energy, trade followed by agriculture and construction industries were the leaders in community and trade followed by manufacturing topped the list under employee theme as shown by Table 12.2.

Given that the sample is made up of 10 industries which are not of equal size, we cannot conclude which industry attain t